2026 SEC Exam Priorities for Registered Investment Advisers and Registered Investment Companies

On November 17, the U.S. Securities and Exchange Commission (SEC) Division of Examinations (the Division) released its Fiscal Year 2026 Examination Priorities (the 2026 Priorities),¹ outlining the key topics that the Division plans to focus on during the fiscal year ending September 30, 2026. Although there are certain shifts in emphasis, for investment advisers, the 2026 Priorities continue the prior year’s focus on fiduciary standards of conduct, effectiveness of advisers’ compliance programs, never-examined and recently registered advisers, and adherence to new and amended rules, including the 2024 amendments to Regulation S-P.²

The 2026 Priorities also highlight the SEC’s increasing attention to the use of emerging artificial intelligence (AI) technologies. In contrast, crypto assets, which were previously a stand-alone priority, are not specifically referenced in the 2026 Priorities, possibly due to pending federal legislative efforts.³ However, a number of compliance program concerns relevant to crypto-asset advisers, such as the custody rule, are among this year’s priorities. Further, unlike the SEC priorities in the past few years, examination of private fund advisers is no longer a stand-alone priority, but specific points regarding such advisers arise under other priorities and are generally noted below.

As in prior years, the 2026 Priorities are organized primarily by the type of market participant (e.g., investment advisers, investment companies, broker-dealers, and self-regulatory organizations) with priorities that apply to various market participants addressed in separate sections (e.g., cybersecurity; Regulation S-P; emerging financial technology such as automated investment tools, AI technologies and trading algorithms or platforms; and anti–money laundering (AML)). Below is a summary of the 2026 Priorities of particular interest to registered investment advisers (RIAs) and registered investment companies (RICs). Such priorities may also apply to other market participants, as noted below.

Risk Areas Affecting Various Market Participants

Information Security and Operational Resiliency. Consistent with the SEC’s 2024 and 2025 Priorities, the 2026 Priorities emphasize cybersecurity, prevention of disruptions to mission-critical services, and protection of investor information, and they focus on policies and procedures pertaining to governance practices, data loss prevention, access controls, account management, and responses to and recovery from cyber-related incidents, including ransomware attacks. In addition, the 2026 Priorities highlight training and security controls that firms use to identify and mitigate new risks associated with AI and polymorphic malware attacks, including how firms operationalize information from threat intelligence sources. The 2026 Priorities also indicate that examiners will review firms’ “operational resiliency.”

As in 2025, the Division will emphasize compliance with Regulations S-ID and S-P, as applicable, including the review of policies and procedures, internal controls, oversight of third-party vendors, and governance practices. A particular focus will be on whether firms’ policies and procedures:

• Are reasonably designed to identify and detect red flags, especially during customer account takeovers and fraudulent transfers
• Include firm training on identity theft prevention⁴

Emerging Financial Technologies. The 2026 Priorities emphasize the use of certain products and services — e.g., automated investment tools, AI technologies, and trading algorithms or platforms — and the risks associated with their use and alternative sources of data. The Division plans to examine firms engaged in automated investment advisory services, including the firms’ recommendations and related tools and methods. In particular, the exams will address whether firms have:

• Accurate Representations about AI Capabilities. The Division will scrutinize “AI washing” — misleading claims about firms’ AI capabilities or the role of AI in investment processes. Firms should ensure that marketing materials, Form ADV disclosures, and client communications accurately describe the extent, nature, and limitations of their AI usage.
• Adequate Policies and Procedures that Govern AI Usage. The Division will assess whether firms have implemented policies to monitor and supervise AI technologies across multiple functions, including fraud prevention and detection, back-office operations, AML compliance, trading functions, portfolio management, and customer service. Firms should be prepared to demonstrate how they evaluate AI tools before deployment, monitor AI-generated outputs for accuracy and compliance, maintain human oversight of material AI-driven decisions, and address potential biases in AI algorithms.
• Managed AI-related Cybersecurity Risks. The Division will focus on the training and security controls that firms employ to identify and mitigate new risks associated with AI, including vulnerabilities to polymorphic malware attacks and AI-enabled social engineering (such as deepfakes used in phishing schemes). Firms should demonstrate how they incorporate information from threat intelligence sources about AI-related attack vectors.
• Operations Aligned with Disclosures. The Division will evaluate whether firms’ actual AI usage matches their representations to clients and regulators. Firms claiming to use AI for portfolio management, for example, must demonstrate that AI tools genuinely influence investment decisions rather than serve merely as supplemental research.

The Division’s integration of AI into multiple priority categories — cybersecurity, emerging technology, automated investment tools, and operational resiliency — signals that AI oversight will be a component of virtually all examinations going forward, not merely examinations of firms specifically marketing AI capabilities.

Anti–Money Laundering

The 2026 Priorities continue the Division’s focus on AML compliance from 2025 and 2024. The Bank Secrecy Act (BSA) requires certain financial institutions, including broker-dealers and certain RICs, to adopt tailored AML programs. The Division will continue to examine whether such entities:

• Appropriately tailor their AML programs to their business models and associated AML risks
• Conduct independent testing
• Establish and maintain an adequate customer identification program, including for beneficial owners of legal entity customers
• Meet their Suspicious Activity Report (SAR) filing obligations.

Examinations of certain RICs will also include a review of their policies and procedures for oversight of applicable financial intermediaries.

As a reminder, in 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) adopted a rule to treat investment advisers as “financial institutions” for purposes of the BSA. In July 2025, however, FinCEN announced its intention to revisit the scope of this new AML rule and delay its effective date until January 1, 2028.⁵ Nonetheless, we recommend that advisers ensure their AML programs comply with the BSA, consistent with the practices of most advisers.

Investment Adviser Exams

Adherence to Fiduciary Standards of Conduct. In exams, the Division will continue to prioritize the duty of care and loyalty in its examinations of RIAs. The Division will review investment advice and related disclosures provided to clients for consistency with an adviser’s fiduciary obligations, such as:

• The impact of advisers’ financial conflicts on providing impartial investment advice
• Advisers’ consideration of the various factors associated with their investment advice, including the cost, investment objectives, investment characteristics, liquidity, risks and potential benefits, volatility, likely performance in a variety of market and economic conditions, time horizon, and exit costs
• Advisers’ seeking best execution

The Division will also focus on certain types of investment products, including:

• Alternative investments (e.g., private credit and private funds with investment lock-up for extended periods)
• Complex investments (e.g., option based exchange-traded funds (ETFs), ETF wrappers on less liquid underlying strategies and leveraged and/or inverse ETFs)
• Products that have higher costs associated with investing (e.g., high commissions and higher-investment expenses than similar products/investments). Examinations will also evaluate whether investment recommendations are consistent with product disclosures and clients’ investment objectives, risk tolerance, and financial/personal backgrounds, with emphasis on:
  • Recommendations to older investors and those saving for retirement
  • Private fund advisers that also advise separately managed accounts and/or newly registered funds (e.g., reviewing for favoritism in investment allocation and interfund transfers)
  • Recommendations of certain products that may be particularly sensitive to market volatility
• Advisers to newly launched private funds and advisers that have not previously advised private funds. The Division will also examine advisers and advisory services or business practices that may create additional risks and potential or actual conflicts of interest, including:
  • Dual registrants
  • Advisers using third-party access to clients accounts where controls may be insufficient
  • Advisers that have merged or consolidated with, or have been acquired by, existing advisory practices, which may result in operational and/or compliance complexities or new conflicts of interest

The 2026 Priorities place particular emphasis on the intersection of alternative investments and retail investors, an emerging trend reflecting the growing “retailization” of traditionally institutional asset classes. The Division will scrutinize recommendations of ETFs that invest in illiquid underlying assets such as private equity or private credit; closed-end funds with significant holdings of less liquid or illiquid investments; products using complex structures such as “ETF wrappers” on less liquid underlying strategies, option-based ETFs, and leveraged and/or inverse ETFs; and private credit and private funds with extended lock-up periods.

This focus reflects the Division’s concern that retail investors may not fully understand the liquidity risks, valuation challenges, fee structures, and potential for significant losses associated with these complex products. Investment advisers should ensure that their suitability and best-interest analyses for such products include enhanced documentation of: why the product is appropriate given the client’s liquidity needs and risk tolerance; the client’s understanding of the product’s unique risks and structural complexities; consideration of simpler, more liquid alternatives; and heightened supervisory oversight of representatives recommending such products to retail clients, particularly those saving for retirement.

Effectiveness of Adviser Compliance Programs. Examinations will focus on compliance programs in core areas such as marketing, valuation, trading, portfolio management, disclosures and filings, and custody. Additionally, examinations on this topic typically review the adviser’s annual compliance review and evaluate whether the adviser’s policies and procedures are reasonably designed to ensure compliance with the Investment Advisers Act of 1940, as amended, and the rules thereunder and to address conflicts of interest in light of the adviser’s particular operations.

Additionally, the 2026 Priorities stated that examinations may focus on whether policies and procedures are implemented and enforced and whether disclosures address fee-related conflicts, with a focus on conflicts that arise from account and product compensation structures. Finally, the 2026 Priorities noted that the Division’s focus may shift depending on an adviser’s practices or products, including for advisers with activist engagement practices (e.g., whether they are making late or inaccurate filings on Schedules 13D and 13G; Form 13F; Forms 3, 4, and 5; and Form N-PX). Exams may also focus on compliance practices when advisers change their business models or are new to advising particular types of assets, clients, or services.

As in previous years, the Division will prioritize examinations of advisers that have never been examined, with particular emphasis on recently registered advisers. Unlike in previous years, however, the 2026 Priorities made no reference to “advisers not recently examined,” possibly indicating constrained resources or a strategic reallocation of attention toward never-examined firms.

Private Fund Advisers. Although examination of private fund advisers is no longer a stand-alone priority as in prior years, the 2026 Priorities incorporate private fund considerations throughout multiple examination focus areas. The Division will focus on alternative investments, particularly private credit and private funds with extended investment lock-up periods; side-by-side management conflicts in which advisers manage both private funds and separately managed accounts or newly registered funds, with scrutiny on potential favoritism in investment allocations and interfund transfers; advisers to newly launched private funds; and advisers new to the private fund space, with examinations likely to assess regulatory awareness, liquidity management, valuation practices, fee structures, disclosures, and differential treatment of investors (including side letter provisions).

The integration of private fund priorities into broader thematic categories rather than a stand-alone section may reflect the Division’s view that private fund issues are now sufficiently mainstream to warrant treatment as general compliance matters rather than specialized review areas. Private fund advisers should expect examination inquiries on these topics even though “private funds” does not appear as a separate heading in the 2026 Priorities.

Investment Company Exams

The Division will continue to prioritize examinations of RICs due to their importance to retail investors, particularly retail investors saving for retirement. Consistent with those of the previous year, the 2026 Priorities note that examinations of RICs will generally include a review their compliance programs, disclosures, and governance practices and will potentially focus on the following areas:

• Fund fees and expenses as well as any associated waivers and reimbursements
• Portfolio management practices and disclosures for consistency with claims about investment strategies or approaches and with fund filings and marketing materials and the amended fund “Names Rule”⁶ (after the compliance date)

The 2026 Priorities also stated that the Division will continue to monitor certain developing areas of interest, such as:

• RICs that participate in mergers or similar transactions, including any associated operational and compliance challenges
• RICs that use complex strategies and/or have significant holdings of less liquid or illiquid investments (e.g., closed end funds), including any associated issues regarding valuation and conflicts of interest
• RICs with novel strategies or investments, including funds with leverage vulnerabilities

As with adviser examinations, the Division will prioritize never-before-examined and recently registered RICs to help RICs in building robust compliance programs.

Key Takeaways and Practical Considerations

Based on the 2026 Priorities, investment advisers, broker-dealers, and other registrants should consider the following actions:

• Conduct Gap Analysis. Compare current compliance programs against the specific focus areas identified in the 2026 Priorities, with particular attention to Regulation S-P incident response programs (compliance dates December 3, 2025, and June 3, 2026); AI usage policies and supervision; operational resiliency beyond cybersecurity; private credit and illiquid investment suitability processes; and Section 13 filing compliance.
• Update Compliance Testing. Ensure that annual compliance program reviews explicitly address the priorities, including testing AI-related controls, identity theft red flag programs, incident response procedures, conflicts arising from compensation structures, and documentation of suitability determinations for complex and alternative products.
• Enhance Documentation. Strengthen documentation of key compliance decisions, particularly best interest and suitability analyses for complex and alternative products, rationale for AI tool selection and ongoing supervision, cybersecurity and operational resiliency testing results, and conflict identification and mitigation measures.
• Review Recent Transactions. Firms that have completed mergers, acquisitions, or other strategic transactions should conduct focused compliance reviews of integration issues, including conflict management, Form ADV accuracy, and supervision of combined operations.
• Plan for ‘Never Examined’ and Recently Registered Risk. Newly registered advisers or firms that have undergone significant growth, acquisitions or business model changes should expect heightened examination interest and may benefit from targeted internal review aligned with the 2026 Priorities.

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1. ^[1]  “Fiscal Year 2026 Examination Priorities,” SEC Division of Examinations, November 17, 2025. ↩

2. ^[2]  “Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information,” SEC, Advisers Act Rel. No. 6604 (May 16, 2024). ↩

3. ^[3]  The House passed its version of a crypto/digital asset market structure bill, called the Digital Asset Market Clarity Act of 2025 (CLARITY Act), in July 2025. The Senate Banking Committee, which has oversight of the SEC, is currently considering a bipartisan discussion draft released in its latest version on September 5, 2025, the “Responsible Financial Innovation Act of 2025.” In November, the Senate Agriculture Committee, which has oversight of the Commodity Futures Trading Commission, released its “Bipartisan Market Structure Discussion Draft.” ↩

4. ^[4]  Regulation S-P amendments have a compliance date of December 3, 2025, for large covered institutions (RIAs with $1.5 billion or more in assets under management, investment companies with $1 billion or more in net assets, and all broker-dealers and transfer agents that are not “small entities”). All other covered institutions have a compliance date of June 3, 2026. See Goodwin client alert at https://www.goodwinlaw.com/en/insights/publications/2025/11/alerts-practices-dpc-approaching-effective-date-for-regulation. ↩

5. ^[5]  See Goodwin client alert at https://www.goodwinlaw.com/en/insights/publications/2025/07/alerts-otherindustries-fs-fincen-to-postpone-effective-date-and-reopen. ↩

6. ^[6]  “Investment Company Names, Release No. IC-35000” SEC, September 20, 2023, which (broadened the scope of the requirement under the Investment Company Act of 1940 rule 35d-1 [the “Names Rule”] for certain funds to adopt a policy to invest at least 80% of the value of their assets in accordance with the investment focus the fund’s name suggests, and updating other names-related regulatory requirements, including by providing enhanced disclosure and reporting requirements related to terms used in fund names and by establishing additional recordkeeping requirements. See also “Investment Company Names, Release No. IC-35500,” SEC, March. 14, 2025, which extended the compliance date for the Names Rule amendments from December 11, 2025, to June 11, 2026, for larger fund groups and from June 11, 2026, to December 11, 2026 for smaller fund groups. ↩

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.